Correlation Between Steel Dynamics and 21Shares Crypto

Can any of the company-specific risk be diversified away by investing in both Steel Dynamics and 21Shares Crypto at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steel Dynamics and 21Shares Crypto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steel Dynamics and 21Shares Crypto Mid Cap, you can compare the effects of market volatilities on Steel Dynamics and 21Shares Crypto and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steel Dynamics with a short position of 21Shares Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and 21Shares Crypto.

Diversification Opportunities for Steel Dynamics and 21Shares Crypto

0.74

Correlation Coefficient

Steel Dynamics  21Shares Crypto

Poor diversification

The 3 months correlation between Steel and 21Shares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and 21Shares Crypto Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Crypto Mid and Steel Dynamics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steel Dynamics are associated (or correlated) with 21Shares Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Crypto Mid has no effect on the direction of Steel Dynamics i.e., Steel Dynamics and 21Shares Crypto go up and down completely randomly.

Pair Corralation between Steel Dynamics and 21Shares Crypto

Given the investment horizon of 90 days Steel Dynamics is expected to generate 5.08 times less return on investment than 21Shares Crypto. But when comparing it to its historical volatility, Steel Dynamics is 1.27 times less risky than 21Shares Crypto. It trades about 0.14 of its potential returns per unit of risk. 21Shares Crypto Mid Cap is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  1,083  in 21Shares Crypto Mid Cap on September 3, 2024 and sell it today you would earn a total of  632.00  from holding 21Shares Crypto Mid Cap or generate 58.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Steel Dynamics  vs.  21Shares Crypto Mid Cap

Steel Dynamics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Dynamics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Steel Dynamics exhibited solid returns over the last few months and may actually be approaching a breakup point.

21Shares Crypto Mid

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Crypto Mid Cap are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 21Shares Crypto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Steel Dynamics and 21Shares Crypto

The main advantage of trading using opposite Steel Dynamics and 21Shares Crypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics position performs unexpectedly, 21Shares Crypto can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 21Shares Crypto will offset losses from the drop in 21Shares Crypto's long position.

The idea behind Steel Dynamics and 21Shares Crypto Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.